Three Good Hires? He’ll Pay More for One Who’s Great
Published: March 12, 2010 Original Post: http://www.nytimes.com/2010/03/14/business/14corners.html?pagewanted=all
Tell me about your most important leadership lessons.
A. I studied a lot of philosophy at Jesuit High School in Dallas. One of the things that really struck me was that most people seem to think that there’s a separate code of conduct in business from your personal life. And I always believed they should be the same.
So we have what we call foundation principles. They are talked about and emphasized around here constantly. They’re all almost corny, a little bit Golden Rule-ish, but it causes two things. It causes everybody to act as a unit. Even though we’re sort of liberating everybody to choose the means to the ends, we all agree on the ends, and the foundation principles are what cause us to agree on the ends.
As a result, we have people unshackled to choose any means to those ends, but it’s not mayhem because our foundation principles kind of tie us together.
Q. Talk more about those principles.
A. We preach a lot here that team is one of the most beautiful of all human experiences. You do great things together, and you go home at night feeling wonderful about what great things you accomplished that day. That’s what people want, and that’s what wise and sophisticated leaders help cultivate and know that people want. Every bad boss you or I have ever had thinks that what people want is the exact opposite of that.
The way we create a place where people do want to come to work is primarily through two key points. One of our foundation principles is that leadership and communication are the same thing. Communication is leadership. So we believe in just relentlessly trying to communicate everything to every single employee at all times, and we’re very open. We share everything. We believe in complete transparency. There’s never a reason, we believe, to keep the information from an employee, except for individual salaries.
I always make it a point to give the same presentation I give at the board meeting to the staff, and then that trickles down to everybody in the company. I know that occasionally some of that information falls into the wrong hands, but that’s a small price to pay for having employees who know they know just about everything.
Q. What else?
A. One of the other foundation principles is that one great person could easily be as productive as three good people. One great is equal to three good. If you really believe that, a lot of things happen. We try to pay 50 to 100 percent above industry average. That’s good for the employee, and that’s good for the customer, but it’s good for the company, too, because you get three times the productivity at only two times the labor cost.
Q. How do you hire for a senior position from the outside?
A. I’m going to ask a lot of sort of business philosophy questions. I’m going to try to make sure that you’re capable of understanding that business is not really a zero-sum game, even though a lot of people think it is. I’m going to make sure I like you personally, because I think that’s a good gauge. I’ve spent a lot of time teaching other managers to not be afraid to use that as a criterion.
Q. So what are the specific questions?
A. Well, it’s kind of a discussion more than questions. We’ll go into our heartfelt feeling about the type of business that we are. We believe that we’re trying to build sort of a mutually interdependent group of stakeholders made up of the employees, the customers, the vendors, the community — and all of those people are interdependent and balanced. So we’ll talk about that a lot and just see how they sort of react. Some people will think that sounds nutty or impossible. We’ll also work in a statement that communication and leadership are the same thing and see how they react to that.
Q. Is there anything unusual about the way you run meetings?
A. We’re big on what we call the whole-brain concept, which is simply trying to eliminate silos. So we probably have more people than we need in each meeting, and we don’t believe that’s unproductive. In fact, we think it creates a whole-brain awareness. We get a lot of innovation that way.
There’s a real belief in meetings on our part. They’re passionate. They’re long. They’re frequent. We get tired of being in meetings all the time. I know the whole world feels that way, but I actually think we’re at meetings more than just about any other business I can think of. I think it’s really good for us because of the communicative culture we have.
Also, probably 85 percent of our top leaders are women. I don’t want to get into a generalization here, but guess who tends to communicate the best? So I think there’s a natural tendency for more group communication here than there would be if 85 percent of our top leaders were men.
Q. Let’s go back to those principles. Tell me more about how you developed them.
A. When I was a kid, I was put in leadership roles early on and throughout the time I was growing up. It could be sports. It could be in Boy Scouts. I wasn’t really conscious of why that was. But I began to keep a file of thoughts that I thought were the best thoughts I’d ever heard, and those became more and more business-oriented as time went on.
In the early days of the Container Store, we of course had so much closeness with each employee, we were so small, that if you were managing someone and you were having trouble with them, all you really had to do was go out to eat a meal with them, and then you could kind of straighten it all out. You could talk about it. And that becomes much more difficult to do as the organization becomes larger, and you don’t have as much direct contact and as much time to just talk about things.
When we opened the Houston store in 1988, it was so busy that we couldn’t keep up with anything. It was three or four times the business level we had ever experienced before. We were hiring people who were not appropriate culture fits. We were just hiring anybody. It was a nightmare. It was like a different business. It wasn’t the same culture or the same customer service level. So there wasn’t any leadership going on.
Anyway, we literally didn’t know what to do about it, so we called a meeting of all the employees at the store manager’s home. I actually wanted to be a good leader. I wanted to be inspirational. I wanted to be able to communicate to them what we were lacking here and how we could get it.
And that was when I dipped into that file of all the best thoughts I’d ever heard in my life and found the ones that I thought represented the way that we did business, but they had never been written down before. We thought this and we thought that, but they had never been communicated before. I thought they would think they were corny or I thought they’d start throwing fruit at me or something.
It was just amazing, and all anybody wanted me to do for months was just go around and talk about the foundation principles and how we apply them to our company, and how that makes us cohesive and act as a team, act as a unit. And I began to see the incredible fierce pride that people had to work for a company that believed all these things.
Q. What else are they, besides the “one great person equals three good ones” rule?
A. One of them has to do with intuition, where we just beg and plead and try to get employees to believe that intuition does have a place in the work force. After all, intuition is only the sum total of your life experience. So why would you want to leave it at home when you come to work in the morning?
Maybe the most important one is: “Fill the other guy’s basket to the brim. Making money then becomes an easy proposition.” That’s something Andrew Carnegie said on his deathbed that he actually attributed all of his business success to. That’s sort of the opposite of a zero-sum game, and it means creating a mutually beneficial relationship with everyone we work with.
And there’s “air of excitement,” which just gets into the theatrical aspect of a business. Zabar’s on Broadway at about noon on a busy day is a pretty good example of an air of excitement. Three steps into the door, you know if a place has got it.
Q. Tell me more about your file where you keep these sayings.
A. It’s a little manila file that I started in high school, probably in 1968 or ’69. At that age you’re so idealistic. I actually called the file “Philosophy Epistle,” which is embarrassingly adolescent. It’s precocious. But these young Jesuit priests were so eager to teach us everything they knew about Nietzsche and Kierkegaard, and we were so impressionable. We just ate that stuff up.
I was very selective about what I put into that little file. Some of it I was taught by these teachers. Some of it I read. Some of it I even thought of myself. But those were the greatest thoughts I’d ever come across. I was very selective of what I put in there, and they really did kind of mold who I was, how I conducted myself, what my life was about. Then I kept it through college.
But the things in the Philosophy Epistle file became more and more business-oriented in nature. When you start a business you have a very fortunate thing in that you have the opportunity to sort of mold a business around your philosophy, and it’s a very cool thing.
Q. How many sayings were in that file?
A. I’d say there were fewer than 100, maybe about 75.
Q. Is there an expression you often use that is, in effect, No. 8, the one that is not on that list of the company’s seven foundation principles?
A. Yes, and it sums up a lot of things. We talk a lot about a person’s wake, like a boat’s wake.
Q. Explain that.
A. Most people’s wake is much, much, much larger than they can ever imagine. We all can’t imagine that we have as much impact on the people and the world around us as we really do. That’s just a way of getting people to see that everything you do, and everything you don’t do, impacts your business, the people around you, and the world around you, far, far, far more than you can imagine.
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